- Celsius acquired GK8 for $115 million in 2021 but was forced to sell it as part of the restructuring process.
- Shareholders have proposed to allocate $24 million of the sale proceeds for legal fees and $1 million to holders.
Bankrupt cryptocurrency lender Celsius will spend $25 million from the sale of GK8 on legal fees and holders.
Celsius, its creditors and its Series B holders submitted a filing on July 17, stating that series B holders agreed to a settlement over how $25 million of the proceeds from Celsius’ sale of GK8 would be divided. Debtors, the creditors’ committee and the initially consenting Series B preferred holders reached an agreement. Celsius has asked the court to grant the motion.
Shareholders have proposed to allocate $24 million of the sale proceeds for legal fees and the remainder of the $1 million to holders. The settlement agreement was based on the parties’ “mutual desire” to avoid costly litigation and a lengthy confirmation process, which would have resulted in rising professional fees.
According to the report, creditors will benefit greatly from the deal. In addition, the debtors and all parties involved gain invaluable peace of mind for the future. Therefore, the court must override the defendants’ objections and grant the requested relief for the reasons stated in the motion.
Celsius acquired Israeli self-custody firm GK8 for $115 million in 2021. After Celsius’s collapse in 2022, the cryptocurrency lender was soon forced to sell GK8 as part of its restructuring process.
The acquisition was seen as a strategic move to strengthen its position in the crypto lending sector. However, the company had to make the difficult decision to divest GK8 as part of its 2022 restructuring plan.
Legal challenges on several fronts
Celsius faces a slew of legal challenges in the US in recent days. The Securities and Exchange Commission (SEC) sued the crypto lender. So is the Commodity Futures Trading Commission (CFTC). sued the firm. The Federal Trade Commission (FTC) levied a $4.7 billion fine against Celsius during the same period.
The authorities arrested the former CEO of Celsius, Alex Mashinsky. His bail was established for $40 million afterward.
Mashinsky has pleaded not guilty to charges of misleading customers and blowing up the Celsius [CEL] sign.
Celsius and his creditors will appear in court in New York on July 18.